Los Angeles daily herald., 1887-12-31

A'ibi'ioh Oi NObeiCpS, uabS lbSucu eDOCl
and made pledges upon the propert,
OF the company, and to the extent O
s29 600, 900, and that the Uniol
Pacific and Central Pacific viola
ted many provisions Of the Thurman
act. He objects to the extension O
time suggested by the majority re
port, CONT nding that the debt woulc
not be paid by pursuing this course
and urges the forfeiture OF the charter
and the appointment of u receiver t(
sell the roads and reimburse the gov
ernment for the moneys it has ad
vanced.
THE MAJORITY REPORT.
WASHINGTON, December go The
report of the Pacific Railway Com.
mission is now ready and will be sub
mitted to Congress upon its reopen
ing. The maj jIrity report is signed by
+. Ellery Anderson and David Z.
l-ittler. 1t is favorable to the Pacific
Roads, while the minority report OF
Ex-Governor Robert Pattison is hostile
and declares that the aided railway
companies have failed to keep faith
with the Government. TO satisfy the
Governments claim, the majority re.
port speaking OF the Union Pacific,
finds the main line well built and
equipped while the branch lines largely
add to the earning power OF the road.
The actual value OF the main line
from Omaha to Ogden, with equip
ments, are placed at one hundred and
fifty million dollars. As the Govern
ment lien on the Kansas Pacific does
not apply to the terminal facilities at
Kansas city the Commission deem it
impracticable to estimate the value of
the property. The report then shows
that the present value of the obliga-
tons Of the Union Pacific to the
United States is nearly $51 ,00o, ,000
Reckoning at the rate of three per
cont. on this sum, under the provisions
OF the mortgage proposed by the bill,
and one-half of one per cent. on the
outstanding bonds, about $1,000, 900
would represent the annual require
ments, which after the expiration OF
ten years, would become 81 900 900.
This plan of reasonable rate OF
interest, with due regard for the
financial ability of the road, ia pro
posed, it being universally conceded
that the Union Pacific cannot pay its
Indebtedness at maturity. A system
requiring the annual payment OF per-
centage of the net earn ngs is declared
as undesirable, as leading to endless
disputes involving incessant litigation
to which the sovereign power
OF the United States should
not he subjected. In the bills
submitted, the payments of the re-
spective companies are fixed by the
semiannual amount Of interest ac-
cruing on their bonds and a fixed per
cent of the outstanding bonds direct
ed to be paid semi-annually into the
sinking fund. In case of a refusal of
the companies to accept the terms of
the proposed bills, the commission
finds it impossible to substitute the
present system for the method of
fixed payment. The history of the
Union Pacific developed in the second
part Of the report shows the assets in
former years to have been misapplied
and the financial ability to meet just
obligations impaired by men holding
fiduciary relations with this corpora
tion. The report then discusses the
case of the un ted States VS..
lhe Union Pacific, wherein
it was held that the Gov
ernment could not alone, or through
Congress, sue the corporations Of
ficers who appropriated its assets for
to compel them to refund
the same, either to the corporation or
to satisfy the Governments claim, on
the ground that the United States
was an ordinary creditor, therefore
had to wait until the maturity OF
the debt for enforcing equitable
looking to greater security.
The report declares that this decision
was great public misfortune, as it
leaves the wrongs complained OF with
out an efficient remedy, intimating
that the court gravely erred in over
looking the fact that it was the COM
pany's promise to pay destroyed by
the acts complained of, and dis
from the security, ta-
ken by the statutory lien
that tho United States mainly
relied upon. The court made
fatal mistake in failing to rec
ognze the financially weak state Of the
when it was said that the
right to appropriate half OF the trans
portation service and five per cent of
the net earnings, might be sufficient
as sinking fund to pay the entire
debt, principal and interest, before it
fell due.
Since this opinion was published.
five per cent have been increased to
So per cent and half transportation,
and still but little progress was made
in making provision for this large
obi alton. The failure of people or
their representatives in Congress TO
consent to any adjustment OF
these matters is attributed to
their unwillingness to permit these
wrongs to go unredressed without an
effort to prosecute the offender. For
this reason it is proposed in the bill
that on applica ion OF the Department
of Justice the Union Pacific shall in
stitute suits or proceedings against
the trustees, directors or officers OF
the company for any cause what
soever.
The Central Pacific Railroad is next
taken up, its subsidized portion being
from a point SIX miles west Of Ogden
to Sacramento, distance of 735
miles, and from Sacramento to Ssn
Jose, formerly known as the Western
Pacific, to the souih end Of San Fran
cisco bay, a distance of 1913 miles.
The total subsidy was near.y $685.
900, 900. The extensions and consoli-
dations are then explained and present
mileage placed at nearly 1400 miles of
which 500 miles are subsidized. Local
branch roads operated under leases
are regarded to have aided largely the
income of the main line. In addition
to these branches a complete sys-
tenn known as the Southern Pac fic
is operated from Goshen, CAL, to
New Orleans, where water connection
is made with the East, was operated
by the Central Pacific, prior to 1885,